A little more than that. But the dollar strength is certainly lowering the dollars per barrel cost.
Note the recent change in the price per barrel/gold.
Posted on 11/05/2014 5:09:15 AM PST by thackney
We’re beginning to see the effects that the low oil prices of the past few months is having on America’s domestic energy boom. On Thursday, ConocoPhillips became the first major producer to announce it plans to scale back drilling in some of the hottest U.S. oil plays, such as the Rocky Mountains and the Permian Basin of West Texas.
While ConocoPhillips still expects to boost production from other areas, chief executive Ryan Lance told reporters the company also may cut exploration spending. Oil prices on the world market have fallen more than 25 percent since June, and the price of West Texas Intermediate crude, the U.S. benchmark, is now trading at a three-year low of $76 a barrel, down from more than $107.
Meanwhile, Shell said it plans to cut spending and eliminate jobs in its U.S. operations because of weak results from its shale projects. Shell cited the Eagle Ford play in South Texas, one of the country’s hottest drilling prospects, as an area it hopes to exit.
Like many of the major oil companies, Shell came to the hydraulic fracturing game late, and even before the oil price decline it struggled to generate the higher returns it needs as a large company. Now, with commodity prices falling, its prospects of making money in shale have dimmed.
In contrast to the caution exhibited by ConocoPhillips and Shell, independent producers have said they expect to continue their fracking operations unabated. Many smaller companies have lower cost structures and can still make money fracking at current prices.
Oil would have to fall farther before they started feeling the pinch....
(Excerpt) Read more at forbes.com ...
Now we know WHY oil prices suddenly dropped. The Saudis want the U.S. OUT of fracking in order to control the market. They also knew the people were going to vote the way they did, so they waited to make it rough on Republicans. Shrewd, evil people they are.
Lower oil prices are good for the economy in both the short and long term! This is true for any commodity, as price equilibrium sets in, supply stabilizes and creates a level of certainty necessary for planning.
Additionally, higher energy prices means higher prices for everything else. Not good!!
Oil prices are dropping because the U.S. dollar has been gaining strength against almost every other world currency in recent months. There’s really nothing more to it than that.
At $75~80 a barrel, it won’t end hydraulic fracturing and horizontal steerable drilling in tight formation like shale.
It will certainly slow down the growth. It will drive down the cost of the companies providing services like HydroFrac since the demand will not be driven above reasonable supply.
But at those prices, it will still grow the number of wells, just at a more reasonable pace.
Fracking is not going away. The possibility of fracking will keep the prices down a certain amount. And fracking will become cheaper, less quickly than if there is less of it being done for a time but it will continue to get cheaper all the time. The fact is the oil is in American ground and off American shore.The Saudi dominance is gone. If the Sauds induce the price to decline to $40 to retain their dominance, fracking has done much of its job. The price cannot rise again without American production ramping up again and displacing Saudi oil in the market. Eventually it will be cheap enough that the Sauds don’t have sufficient cost advantage to keep American wells out of production. And the Saudi fields are depleting.
Not so fast!
Super low oil prices will also cut jobs in the Dakotas, and shut down domestic energy. They are also an indicator of a weak economy.
Not so much shrewd as desperate.
A little more than that. But the dollar strength is certainly lowering the dollars per barrel cost.
Note the recent change in the price per barrel/gold.
The House of Saud ain’t get tin’ its’ monies worth from the Clinton Foundation!
Then why has the cost of food kept rising, milk now is over $4 a gallon. And if you are trying to avoid those growth hormones it is MORE!
Even the Military Commissary has milk at $4 a gal. Bread at over $2. Meat is out the roof and becoming unfordable, unless you like to eat bologna and hot dogs and they don’t come to cheap either.
not even supply and demand?
Did you post on the wrong thread?
“Oil prices are dropping because the U.S. dollar has been gaining strength against almost every other world currency in recent months. There’s really nothing more to it than that.”
Then why are the Saudi’s dropping their price for the US and raising their price (in US dollars) for other regions?
The strength of the dollar is pushing oil and other commodities lower.
Oil was at 115 USD/bbl in mid-June. It opens today at 78 and change USD/bbl.
The dollar has not strengthened that much against other currencies, but it will be appreciating against the yen for some time.
Over the past FOUR MONTHS, the US has increased production by 500,000 barrels per day. Libya has moved from 200k bbl/day to 900k bbl/day.
IEA projection for 2014 global demand growth was only 700k bbl/day. In other words, supply is exceeding projected demand by somewhere in the neighbourhood of a half million barrels/day.
Strong dollar is only part of the equation. Supply/demand is out of whack. Emphasis on “whack”, which is what the Saudis are trying to do to US export potential.
That would have an effect, for sure. But the pricing in U.S. dollars is the biggest factor, in my mind.
It would be nice to see that graph overlayed on a second Y-axis showing the nominal dollar price of oil.
Exactly - the Saudis want the US out of fracking in order to control the market, and are having a fire sale in order to do this.
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